04/17/2026
Interesting real estate insights from our Howard Hanna-Allen Tate offices:
ECONOMIC INSIGHTS W/LEADING RE'S CHIEF ECONOMIST, Dr. Marci Rossell
One of the most compelling worldwide demographic shifts is the rising birth rate among women over the age of 40 surpassing that of women under 20. This trend underscores the broader societal behavior of the Millennial generation, which continues to delay major life milestones, from homeownership to starting a family.
This dynamic has profound implications for global population trajectories:
Peaked Populations: China, Japan, Germany, and Italy.
Declining Populations: South Korea.
Growing Populations: India and Nigeria. Notably, Nigeria is projected to become the world's most populous country within the next two decades at its current growth pace.
Inflation, Geopolitics, and the FED Dilemma
The most significant immediate economic driver is the US/Iran war, with initial inflation data confirming its impact. The inflation rate has jumped from 2.5% to 3.5%. Crucially, this increase occurred before oil barrel prices exceeded $100, signaling that subsequent reports will reflect broader price increases, pushing the rate higher—most likely to 4.5% within the month. While the global economy's reduced reliance on fossil fuels mitigates the kind of severe recessionary pressures seen during the 1970s oil crises, the escalating inflation rate remains a major economic concern.
Previously, the market anticipated a Federal Reserve (FED) rate cut this year, but that possibility has evaporated. The FED faces a classic dilemma: pre-war, decelerating inflation and a softening labor market suggested a coming rate reduction. Now, rising inflation ties the FED's hands. Failure to increase the rate to counter inflation will likely drive mortgage rates higher. With rates already hovering around 6.50%, the key question for the housing market is how much higher they will climb.
US Labor Market and Consumer Confidence
The US labor market showed weakness in 2025, creating only 180,000 jobs. Solid salary expectations are a prerequisite for major purchases like homes, and current conditions are mixed. While unemployment is stable, firms are operating in a "no fire/no hire" environment—retaining senior workers but significantly limiting new hires, especially among young people. This elongates the job search for new entrants and dampens overall consumer confidence. Simultaneously, the implementation of AI technology is fueling parental anxiety regarding the future job prospects of their children. "where and when are my kids going to get a job" is an ongoing parent question!
Artificial Intelligence and the Future of Work
AI is driving a significant reevaluation of education, with more students considering trade schools over traditional universities. AI acts as a substitute for certain job markets, such as computer programming and software development. In this new landscape, relationship building and soft skills are paramount. Students who gravitate toward technology careers due to difficulties with relationships may find the job-eliminating effects of this AI transition particularly challenging. Therefore, a classic university education remains valuable for fostering relationship development.
The true impact of AI on the labor market will materialize over the next five years. While current conversations center on job destruction rather than creation, the ultimate outcome is unknown. History offers a perspective: 6 out of 10 jobs existing today did not exist in 1940. We anticipate a similar paradigm shift over the next half-decade, as new technology-enabled jobs emerge.
AI's Energy Footprint
AI is a substantial consumer of energy and water, which will contribute to rising energy prices. This challenge is driving innovation in alternative energy solutions; for instance, China is powering its AI infrastructure with increased solar energy. Furthermore, a growing, often government-mandated, trend sees AI firms bypassing existing grids by building their own power plants, minimizing their impact on energy used by local consumers.
Housing Market: Affordability and Sales Pace
Rising mortgage rates have made housing affordability a critical issue and a major political campaign topic in the US. However, compared to other global regions (as evidenced by this graph), the US is not among the highest unaffordable areas.
Global housing affordability
The annual house sales pace has remained flat at 4 million units for the last four consecutive years, falling short of the 5 million pace considered healthy or normal. While the pandemic-era mortgage rate lock-in effect is gradually diminishing due to life changes, consumer confidence—linked to ongoing inflation and the conservative "no fire/no hire" labor environment—remains a brake on the market - the word is "caution"! We must actively seek opportunities within this challenging market because people will always need housing.
